Oxbridge Re CEO: Tokenized reinsurance sidecar securities to deliver 45% return

According to Jay Madhu, the Chairman and Chief Executive Officer of Cayman headquartered reinsurer Oxbridge Re, the firm’s first series of tokenized reinsurance sidecar securities are set to deliver investors a 45% return, surpassing the initial expectation of 42%.

As we’ve reported, Oxbridge Re launched its Web3 startup SurancePlus in 2022, raising $2.4 million through the sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re.

That $2.4 million of capital was used to support collateralized reinsurance contracts, underwritten via its sidecar structure, Oxbridge Re NS.

The securities represent fractionalized interests in reinsurance contracts written by its reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota shares with its parent.

So the investors benefit from a return through the performance of the underlying reinsurance contracts that sat in the sidecar for the current underwriting year, which runs to the mid-point of 2024.

As we later reported towards the end of last year, Oxbridge Re was anticipating that investors in the first series of tokenized reinsurance securities would receive a roughly 42% return for the first treaty year.

Now, CEO Jay Madhu has explained that it anticipates a higher return being earned by its investors, which is perfectly timed news given the company is raising for its second issuance of tokenized reinsurance sidecar securities at this time.

“We are pleased to report that investors in our 2023 issued Delta CatRe tokens are poised to realize returns exceeding 45%, surpassing our initial expectations of 42%.

“This achievement is particularly noteworthy, given the challenges posed by Hurricane Idalia, which made landfall as a Category 3 hurricane in 2023,” Madhu explained.

Now, Oxbridge Re is in the process of raising up to $10 million for a new series of EpsilonCat Re tokenized reinsurance securities that will be issued by its subsidiary SurancePlus Inc.

Again, these will invest in the firm’s reinsurance sidecar and offer a novel approach to encouraging capital to support the Oxbridge Re underwriting book.

As we’ve stated a number of times, digital or tokenized reinsurance securities may be considered by many to be an added layer of complexity on top of an investment product that is already institutionally focused, but they do have the potential to broaden the appeal and bring in different types of investors as well.

But, more compelling might be if investors had the option to trade the digital EpsilonCat Re reinsurance tokenized securities on the Avalanche chain, bringing in a secondary trading element that could be digitalised.